Knowing that ESPR Article 25 applies to your sector is the starting point. The harder question — which entity in a multi-party operating structure actually holds the obligation — depends on who owns the stock, who placed it on the market, and who makes the disposition decision. In franchise networks, concession arrangements, 3PL distribution models, and marketplace fulfilment, those three things frequently sit with different parties.
The ESPR Article 25 destruction prohibition sits with the economic operator. In a straightforward retail model — a brand manufactures, imports, and sells its own product — the economic operator is obvious. In the operating structures that characterise modern fashion distribution, it is not. Concession agreements, franchise supply chains, 3PL import licences, and marketplace fulfilment programmes all create arrangements where stock ownership, market placement, and physical disposition are split across multiple parties.
The regulation does not resolve these structures explicitly. It establishes a principle — the entity that places the product on the EU market holds the obligation — and leaves the application of that principle to the specific facts of each arrangement. Those facts are contained in commercial contracts that were not drafted with Article 25 in mind and that will require amendment before July 2026 in most cases.
This article works through four structural categories — supermarkets and promotional retailers, department store concessions, franchise networks, and 3PL and marketplace models — and identifies where the obligation falls in each, and where the contractual gaps currently sit.
Obligation reference matrix
The table below maps the primary obligation position across the operating structures covered in this article. The ‘depends’ entries reflect structures where the obligation follows contractual and operational facts that vary by arrangement. The notes column identifies the determining factor in each case.
| Structure | Holds obligation | Determining condition | Key Point |
|---|---|---|---|
| SUPERMARKETS AND PROMOTIONAL RETAILERS | |||
| Grocery retailer — own apparel range | YES | Always | Large enterprise threshold met. Promotional stock and customer returns both in scope. |
| DEPARTMENT STORES | |||
| Department store — own-label and bought-in stock | YES | Always | Stock ownership determines obligation. End-of-season disposal sits with the retailer. |
| Department store — concession stock | DEPENDS | Who executes disposal | Brand is economic operator; department store may be executing disposal without documentation. Contractual exposure. |
| Concession brand | YES | Title retention | Brand retains title and economic operator status. Disposal executed by department store requires brand-issued documentation. |
| FRANCHISE NETWORKS | |||
| Franchisor — centrally held stock | YES | Always | Franchisor's own inventory in supply chain is within its Article 25 perimeter. |
| Franchisee — stock in estate | DEPENDS | Whether threshold met | Obligation active if franchisee meets large enterprise threshold independently. Most franchisees will not at this tier. |
| Franchisor — network disaggregation | YES | Always | Franchisor cannot use franchise structure to disaggregate its own Article 25 obligations. |
| 3PL AND LOGISTICS OPERATORS | |||
| 3PL — standard storage and fulfilment | NO | No title, no market placement | Service provider position. Obligation remains with the brand. |
| 3PL — importer of record | YES | Import licence held by 3PL | Economic operator by ESPR definition. Holds obligation for entire portfolio of brands it imports for. |
| 3PL — clearance acquirer | YES | Title transfer | Obligation transfers with title at point of stock acquisition. |
| 3PL — managed disposition | DEPENDS | Who makes destruction decision | Contractual clarity required. Disposition decision-maker may be de facto economic operator. |
| MARKETPLACES | |||
| Marketplace — third-party facilitation | NO | No title, no market placement | Default service provider position. Seller holds the obligation. |
| Marketplace — fulfilled-by-marketplace | DEPENDS | Control over disposition | Physical custody and disposition decisions create economic operator argument. Regulatory direction unsettled. |
| Marketplace — buyback and resale programme | YES | Title acquisition | Marketplace is economic operator for stock it owns and places on market. |
Supermarkets and promotional retailers
The Article 25 scope question for grocery retailers with apparel ranges is settled before it is asked. The major European grocery retailers — Tesco, Carrefour, Lidl, Aldi — are large enterprises by any measure. Their apparel, clothing accessories, and footwear sit squarely within the product categories covered by the delegated regulation. The obligation applies.
The structural exposure is the promotional stock model. Weekly clothing specials are built on finite sell-through windows. When the window closes, leftover stock has no natural home within the core business — stores clear space for next week’s range. End-of-run unsold apparel has historically moved to clearance liquidators or been disposed of. From July 2026, disposal of that stock requires a documented derogation ground at the point of decision. Volume-based clearance arrangements where stock is aggregated and sent for disposal without item-level documentation will not satisfy Article 3.
The secondary exposure is customer returns. Grocery retailers process apparel returns through general merchandise counters — no grading, no derogation mapping, often direct disposal. That flow generates an Article 25 obligation with no evidence trail attached to it.
A third exposure applies to grocery retailers that host branded clothing concessions within their non-food sections — a model operated by several major European supermarket groups. Where a fashion brand retains title to concession stock and the supermarket executes season-end disposal through its own logistics arrangements, the obligation sits with the brand and the evidence trail with neither party. The concession section of this article covers the same structural gap in the department store context.
Department store concessions: ownership, disposal, and the contracting gap
TDepartment stores operate multiple stock ownership models simultaneously. Where a department store buys stock outright — own-label ranges, bought-in branded inventory — it is the economic operator. The Article 25 obligation for that stock sits with the retailer. End-of-season clearance, markdown failures, damaged goods disposal, and buyer cancellations are all within its perimeter.
The concession model
The concession arrangement is structurally different. In a standard concession, the brand retains title to the stock. The department store provides floor space and operational infrastructure but does not own the inventory. When the season ends and unsold concession stock requires disposal, the brand is the economic operator — it placed the product on the market and retains title. The Article 25 obligation is the brand’s.
The practical problem is that the brand is not present at the disposal event. The department store is physically handling stock it does not own, routing it through its own logistics arrangements, without visibility of whether the brand has generated the Article 25 derogation documentation required before disposal. If inspectors audit the disposal chain and find unsold concession stock destroyed without documentation, the brand is liable — but the department store is implicated in the disposal that occurred without it.
| The obligation follows title. The disposal follows the retailer’s logistics arrangements. The documentation gap sits in between. |
The commercial consequence for concession contracts
This creates a procurement lever that has not yet been tested but will be. Department stores hosting concessions are not the economic operator for concession stock. They are, however, the entity that may find themselves in front of an inspector if their logistics partner disposes of that stock without documentation. The prudent response — and the likely market response as awareness of Article 25 increases — is for department stores to require Article 25 compliance evidence from concession brands as a condition of the commercial relationship.
That means requiring brands to demonstrate that their grading and derogation documentation process satisfies Article 3 before the season-end disposal instruction is issued. It means building compliance verification into the concession terms, not leaving it as an assumption. Concession brands that cannot demonstrate a compliant disposal methodology before July 2026 will face commercial pressure from their retail partners, separately from any regulatory enforcement action.
Franchise networks: thresholds, supply chains, and the disaggregation question
The franchise model creates two Article 25 questions that most franchise operators have not yet worked through: which entity in the network holds the obligation, and whether the franchise structure allows the franchisor to disaggregate its own obligations through the network.
The franchisor position
Where the franchisor manufactures or sources stock centrally and supplies it to franchisees, it is the entity placing the product on the EU market at the point of supply. Centrally held stock — including inventory in the franchisor’s distribution centres awaiting dispatch to the franchise network — is within the franchisor’s Article 25 perimeter. When that stock is unsold, the derogation and documentation obligation sits with the franchisor, not the franchisee.
The franchisor cannot use the franchise structure to disaggregate this. Its own inventory does not become a franchisee’s obligation simply because the franchisee is the intended recipient. Stock held in the franchisor’s supply chain is the franchisor’s Article 25 exposure.
The franchisee position
The franchisee is the entity placing the product on the market at point of sale. Its Article 25 obligation is assessed on the same threshold as any other entity: 250 or more employees and 50 million euros or more annual turnover. Most individual franchisees operating below that threshold are not in scope for July 2026. Those that meet the threshold independently — larger multi-site franchisees in particular — are.ofile against the Article 25 requirements and the recovery potential you are currently missing.
3PLs and logistics operators: service provider, importer of record, and the gap between them
The default position for a 3PL is that it is a service provider. It stores, moves, and handles goods on behalf of a brand. It does not place products on the market. The Article 25 obligation sits with the brand. That default holds in straightforward storage and fulfilment arrangements. Three circumstances move it.
Clearance acquisition
Some 3PLs have developed adjacent businesses where they acquire unsold or returned stock from brands at a discount and liquidate it through their own resale channels. The moment a 3PL takes title to that stock and places it on the market under its own commercial arrangement, it is the economic operator for Article 25 purposes. The brand’s obligation ended when title transferred. The 3PL’s obligation began. At that point, the 3PL needs its own grading, derogation mapping, and Article 3 documentation capability for every unit it holds.
Managed disposition services
Some 3PLs have evolved their returns offering to include disposition decisions — triaging returns into resell, donate, or dispose pathways on behalf of the brand. Where a 3PL is making disposition decisions under a managed service contract, the question of who decided to destroy a given item becomes contested. The brand is the economic operator. But if the 3PL is making the destruction decision autonomously under a managed service agreement, and no Article 3 documentation exists for that decision, the brand is non-compliant and the 3PL is the entity that executed the disposal.
Brands relying on 3PLs to manage returns disposition need contracts that place the Article 25 documentation obligation explicitly with them, and that require any destruction instruction executed by the 3PL to operate against a pre-approved derogation framework provided by the brand. A managed service agreement that gives the 3PL discretion over disposition without that framework is a compliance liability.
3PLs as importers of record: where the obligation transfers entirely
The importer of record scenario is structurally different from both of the above. It does not describe incidental exposure. It describes primary economic operator status — and it is more common in non-EU brand distribution than either party typically registers.
ESPR defines economic operator to include importers: any person established within the Union who places a product from a third country on the EU market. Where a 3PL acts as importer of record for a non-EU brand — clearing customs, holding stock, and fulfilling EU orders under its own import licence — it is frequently the entity that has placed the product on the EU market in the legal sense. If the 3PL is the importer of record, it is the economic operator. The Article 25 destruction prohibition sits with the 3PL, not the brand.
| A 3PL acting as importer of record for twenty non-EU fashion brands may be carrying Article 25 obligations for twenty separate product portfolios simultaneously. Neither the 3PL nor the brands will have registered that the obligation transferred with the import licence. |
Every unit of unsold apparel, clothing accessories, or footwear in that 3PL’s EU warehouse — across every brand for which it acts as importer of record — sits within its Article 25 perimeter. Every return that comes back to its facility and is disposed of is its derogation event to document. A standard 3PL services agreement does not address this. It specifies storage rates, handling fees, and liability caps for loss or damage. It does not address who holds the Article 25 obligation for unsold stock or what documentation must accompany a destruction instruction.
The brand faces the mirror position. A non-EU brand that has outsourced EU fulfilment to an in-market 3PL may assume its Article 25 exposure sits with the 3PL. Whether that assumption is correct depends entirely on whether the 3PL is genuinely the importer of record. If the brand retains economic operator status despite using a 3PL for physical fulfilment — which is possible depending on the import structure — its Article 25 obligation remains intact regardless of who handles the stock.
| THE DIAGNOSTIC QUESTION FOR NON-EU BRANDS USING EU FULFILMENT Who is the importer of record for your EU inventory? If it is your 3PL, the Article 25 obligation for unsold stock in that warehouse sits with them — and you need to know whether they have the infrastructure to discharge it. If it is you, the obligation is yours regardless of who physically handles the stock. Most brands using EU 3PLs for fulfilment have not established this clearly. The services agreement will tell you which position you are in. It will almost certainly not tell you what either party is required to do about it before July 2026. |
Marketplaces: facilitation, fulfilment, and the economic operator boundary
A marketplace that facilitates third-party sales without taking title is not placing products on the market — the seller is. That default service provider position is consistent with EU product liability frameworks in their current form and is the starting point for any marketplace Article 25 analysis. Three circumstances move it.
Fulfilled-by-marketplace inventory
Where a marketplace takes physical custody of seller inventory in its own warehouses, it controls the stock and makes decisions about storage, handling, and disposition. When fulfilled-by-marketplace inventory is determined to be unsellable — whether through damage, failed sale attempts, or withdrawal from the programme — the marketplace makes the disposition decision. If that decision is destruction, the marketplace is the entity executing it without documentation it did not generate.
Whether a marketplace in this position is the economic operator for Article 25 purposes is not yet settled in regulatory guidance or enforcement practice. The direction of travel in EU product liability law — which has progressively extended platform responsibility through the General Product Safety Regulation and the Digital Services Act — points toward the argument being made. The prudent position for any marketplace processing significant apparel volumes through a fulfilled-by-marketplace model is to assume that regulators will look for the entity with the most control over the disposition decision.
Marketplace buyback and resale programmes
Where a marketplace buys stock from sellers — returned goods, end-of-season inventory, clearance lines — and resells it under its own programme, it is the economic operator for that stock. It placed the product on the market. The Article 25 obligation for unsold or further-damaged inventory within those programmes sits with the marketplace, not the original brand. The brand’s obligation ended when it sold the stock to the marketplace. The marketplace’s obligation began at that point and requires the same grading, derogation mapping, and Article 3 documentation as any other economic operator.
Return processing and regulatory trajectory
In marketplace models where the marketplace processes returns on behalf of sellers, it may be making destruction decisions for stock where the seller is the nominal economic operator but has no visibility of the outcome. Sellers using marketplace return processing need to understand whether those disposition decisions bind them and whether they are being made against a documented derogation framework. The Digital Services Act has established that large platforms cannot indefinitely disclaim responsibility for activity on them — ESPR enforcement will test where marketplace responsibility for product destruction ends.
The contractual work that needs to happen before July 2026
The commercial contracts governing these arrangements were not drafted with ESPR Article 25 in mind. Concession agreements, franchise contracts, 3PL services agreements, and marketplace seller terms all require review against a single question: is it clear which party holds the Article 25 obligation, and does that party have the infrastructure to discharge it?
For brands operating through any of these structures, establishing their specific obligation position before July 2026 is the starting point — not after the first inspection creates a need for retrospective documentation that cannot be assembled. The Invalusys Recovery Analysis maps the obligation position, identifies the documentation gaps, and quantifies the recovery value that compliant stock management generates alongside the compliance infrastructure.
Establish your Article 25 obligation position
A Recovery Analysis identifies which entity in your operating structure holds the Article 25 obligation, maps the documentation gaps in your current disposal process, and quantifies the recovery value your operation is currently leaving unrealised.
Frequently asked questions
In a department store concession arrangement, who holds the Article 25 obligation?
The brand, in most standard concession arrangements — it retains title and is the entity that placed the stock on the market. The department store is not the economic operator for concession stock it does not own. If it executes disposal without the brand providing compliant Article 25 documentation, both parties face exposure. Concession contracts need to address this explicitly
Can a franchisor use the franchise network to disaggregate its Article 25 obligations?
No. The franchisor’s own inventory — stock held centrally in its supply chain, including inventory awaiting distribution to franchisees — is within its Article 25 perimeter. The franchise structure does not transfer the franchisor’s obligations to franchisees. Individual franchisees have their own Article 25 position, determined by whether they meet the large enterprise threshold independently.
If a 3PL is the importer of record for a non-EU brand’s EU inventory, who holds the Article 25 obligation?
The 3PL. ESPR defines economic operator to include importers — any entity established within the EU that places a product from a third country on the EU market. Where a 3PL acts as importer of record, it is the economic operator for that stock. The Article 25 destruction prohibition sits with the 3PL, not the brand. Both parties need to establish clearly which entity is the importer of record and ensure the entity that holds the obligation has the infrastructure to discharge it.
Are marketplaces like Amazon responsible for Article 25 compliance on fulfilled-by-marketplace inventory?
The regulatory position is not yet settled, but the direction of travel in EU product liability law points toward marketplaces in fulfilled-by-marketplace models carrying economic operator exposure for stock under their physical control. Where a marketplace has acquired stock through a buyback or resale programme, it is unambiguously the economic operator and holds the Article 25 obligation for that inventory. Sellers using fulfilled-by-marketplace programmes should understand whether their marketplace’s disposition decisions are being made against a documented derogation framework.